Tumblr was bought for the same price as a modest family home in San Francisco

Yesterday, Automattic, the creator of WordPress, announced it had acquired Tumblr for “less than $3 million” from its previous owner, Yahoo. It’s an inauspicious fall from grace for the site, which was previously sold to the search giant for $1.1 billion.

Why did Yahoo sell one of its prized possessions for a mere 0.27 percent of its original purchase price?

It’s a question that’ll puzzle many, as unlike other faded social platforms, Tumblr still has a die-hard userbase, and continues to pull in a respectable amount of traffic. I’d postulate that Tumblr was simply too troublesome to monetize and moderate, and that’s why Yahoo pulled the plug.

That leaves the question of what Automattic will do with the site. It already produces the world’s biggest blogging platform, and also operates a highly profitable hosting platform that’s geared towards individual and enterprise users alike.

And, for what it’s worth, I think Automattic can succeed where Yahoo failed, largely due to the fact that it has a less corporate working culture, and is therefore well suited to managing a youth-oriented, often anarchic blogging site.

But I still can’t get over the fact that Tumblr sold for such a dismally small figure. For context, that’s about the same price as a modest family home in San Francisco.

If Automattic put its money in the real-estate market rather than in Tumblr, it could have got this gorgeous four-bedroom home in sunny Corona Heights. Retailing at $2,785,000, this quaint 1916 building boasts a generous 2,545 square feet of living space, three bathrooms, and stunning panoramic views of the city.

Too rich for your blood, Mullenweg? How about this historic family home on Bush Street, in the middle of San Francisco’s cosmopolitan Polk Gulch neighborhood. $2,495,000 gets you three bedrooms, an equal number of bathrooms, and 2,153 square feet of living space. It also comes with an ornate back garden filled with pear and lemon trees – potentially saving you money on your weekly Whole Foods bill.

Looking for a home with a view, Mullenwegg? How about this four bedroom home in Potrero Hill, which boasts stunning vistas over the city. It also comes with a rare entitlement to knock it down and rebuilt it with one additional level over the existing neighborhood homes. Handy if you’ve got any cash left over from not buying Tumblr. It could be yours for just $2,500,000.

Okay, I’m possibly being a bit facetious, but you get my point right? Tumblr was sold for an absolute pittance.

Social networks seldom get a second chance. Friends Reunited, for example, was acquired by UK broadcaster ITV in 2005 for £120 million (then $208 million), and eventually was ditched to a Scottish printing house for £25 million. A few years later, it closed down for good.

Another great example is Bebo, which AOL acquired in 2008 for $850 million in cash, only to sell it back to its founder for a mere $1 million in 2013. I’m not mad though, because this sale produced perhaps one of the greatest startup YouTube videos ever.

Seriously, stop reading this article and watch it. And then thank me later.

What makes Tumblr any different? Well, Yahoo is selling Tumblr while it still has an active userbase, and is still culturally relevant. It’s the 77th most visited site in the world, according to analytics provider Alexa. In the US, it’s the 48th most popular site, ahead of Spotify and slightly behind PayPal.

So, it’s not exactly a lame duck. But if Automattic wants to see it thrive again, it’ll have to figure out some pretty challenging questions, mostly centered around moderation and monetization. Can it succeed where Yahoo failed?